Victoria's Commercial 3 – a new zone for mixed use and creative industries

Victoria's Commercial 3 – a new zone for mixed use and creative industries
Mark WoodlandSeptember 18, 2018

Melbourne needs high quality mixed use employment precincts now more than ever.

Land use zoning in Australia has traditionally been used to separate activities, often based on the idea that residential, commercial and manufacturing activities are inherently incompatible.

In the new economy, this no longer holds true. In fact, it’s the opposite – many of the new economy jobs thrive on mixed-use, diversity and amenity. For a long time we have needed a zone which allows says a genuine mix of land uses to co-locate.

This is what the new Commercial 3 zone is intended to achieve.

Commercial 3 – a zone for creative industries, small manufacturers and startups.

The Commercial 3 zone is essentially a mixed-use employment zone which is intended to facilitate the establishment and growth of creative industries, small manufacturers and startup businesses. It prioritises particular uses that form part of the emerging economy (including new models of industrial, commercial/office and certain other employment-generating uses).

The nature of businesses operating within the emerging economy is much more diverse than in the past, which is why the Commercial 3 Zone provides for a wide diversity as ‘as of right’ uses. This includes arts and craft centres, education centres, home based business, certain types of Industry, manufacturing sales, markets, offices, and research centres.

Victoria's Commercial 3 – a new zone for mixed use and creative industries
Younghusband Woolstore, Kensington - image: supplied

The zone also allows complementary uses (including accommodation, small-scale retailing, places of assembly, and warehouses) that have the potential to contribute to the amenity and economic vibrancy of the locality. Floor area thresholds have been applied to these uses to reflect their role as small-scale activities within a mixed use employment context. Examples include:

  • Cafés, restaurants or bars can be established in this zone without the need for a planning permit, so long as they are 150sqm or less in floor area – a planning permit is required for larger premises.

  • Activities like cabinetmaking, bakeries and smallgoods manufacturing can establish without the need for a planning permit, as can other industrial uses subject to satisfying certain buffer requirements.

  • A Place of Assembly can be established in this zone without the need for a planning permit, so long as it is 200sqm or less – a planning permit is required for larger premises.

  • A Shop of up to 200sqm and a warehouse of up to 500sqm can establish, subject to a planning permit being granted.

Planning permission can also be sought for dwellings and certain other types of residential buildings in the zone. However, the combined gross floor area of such uses must not exceed 35% of the combined gross floor area of all buildings on the lot.

It is possible for the Planning Authority to vary this percentage up or down via a schedule to this zone. However, the dwelling/residential building percentage can only be varied upwards to a maximum of 50%.

The intent of permitting these uses on a conditional basis is to complement economic activity and allow a genuine mix of uses to establish over time, but to also ensure that such uses do not end up displacing industrial, and commercial/office uses from such areas.

Of course, Melbourne’s existing industrial and commercial zones already accommodate many significant and important industries, a number of which depend upon separation from sensitive uses in order to continue their operations. In many instances, the best outcome will be to retain these areas in their existing zone.

In other instances, it will be a judgement call as to whether the ‘reverse amenity’ decision guidelines contained within the Commercial 3 zone are adequate enough to ensure that existing economic activities are not displaced by new sensitive uses. This will be an important factor in deciding whether to apply the Commercial 3 zone to an area or not.

Why do we need a new zone ?

The Australian economy and the way people perform work within it are changing radically. The line between ‘home’, work’ and ‘leisure’ is blurred and both employees and companies alike are seeking maximum flexibility with how work gets done. But our current zones don’t cater well for these changes.

Contemporary employment precincts and even individual developments will need to cater for the diversity and flexibility that businesses and workers are seeking. They need to incorporate a mix of activities such as bars, restaurants, recreational facilities, etc. as well as provide health, childcare, education and other services. In some instances, a precinct will also benefit from the inclusion of some forms of accommodation, to provide live-work opportunities and to create a level of vibrancy needed to support creative industries and associated activities.

The rapid rise of coworking in Melbourne is an obvious response to these changing workplace trends. But there are many other innovative models emerging as well, including lifestyle oriented workspaces, integrated living/working spaces artisan manufacturing spaces and a variety of creative spaces and cultural venue. You can read more about these models in Echelon’s report on Melbourne’s enterprise areas.

All of these models are variants of a broader theme of mixed use and flexible buildings.

Even the scale and nature of manufacturing has begun to change. Today a single person can design produce and sell goods from their home, using digital design, printing, fabrication, and online marketing and sales platforms. There are far fewer reasons to separate where we live, work and play than there was in the past industrial eras.

This is why we need a new zone - to cater for a wide range of uses and to even allow for accommodation as part of the mix but in a way that does not displace employment activities.

Where would the commercial 3 zone apply ?

Melbourne is fortunate to have significant tracts of industrial and commercial zoned located near transport infrastructure in our inner and middle suburbs. These areas typically comprise older style buildings that have for many years offered affordable accommodation for a wide range of commercial and cultural activities, ranging from small scale manufacturing activities through to low-rent office and production spaces.   

Victoria's Commercial 3 – a new zone for mixed use and creative industries
Current employment zones in inner Melbourne - image: supplied

Far from being economically redundant, these areas are perfect locations for the establishment and growth of new enterprises. So they are a valuable economic resource for our city, complementing the role of the Central City and Activity Centres. We need to nurture economic growth within them.

These areas have good bones that can play an important role in the incubation of creative industries, small batch manufacturing and startup companies.

Most of these areas are currently zoned Industrial, Commercial 2 or Mixed Use. None of these existing zones properly facilitate true mixed-use development. The Commercial 3 zone can be applied to locations that are considered to be well suited to growing new economy jobs – places that have a stock of relatively affordable buildings, are close to public transport, and are close to skilled workers and a large urban market of consumers.

Not every existing industrial or commercial area will be suitable for the Commercial 3 zone. In many instances, the best strategy for retaining or creating low-cost workspace for creative industries might be to simply leave the land in an industrial zone.

Where to next ?

The task ahead is for local Councils to determine whether and where to apply the Commercial 3 to land within their municipality. This decision needs to be informed by an assessment of the ongoing suitability of established industrial and commercial areas for different types of employment purposes, and whether there are locations where the Commercial 3 zone might facilitate growth in creative industries, etc.

Determining whether or not to permit residential use as part of the land use mix in a Commercial 3 zone will be the most challenging part of the equation for Councils to address. It won’t be appropriate to allow housing in every Commercial 3 precinct, but equally, not every employment precincts need to be set aside for single-use purpos­es. Achieving a mix of uses is a large part of what drives the amenity and dynamics that make places attractive for business.

However, residential uses are only intended to be permitted where it can be demonstrated that it will complement the employment and economic development focus of the zone. A thorough analysis of the potential commercial and land use impact of residential use will need to inform the strategic justification for any future proposals.

Melbourne and Victoria need high quality mixed use employment precincts now more than ever. The Commercial 3 zone is an innovative new tool to provide flexibility for a wide range of small scale activities to co-locate with office and light industrial activities.

It is a much-needed and very welcome new tool to help create foster and grow creative industry in this State.

Mark Woodland is a director of Echelon Planning and provided advice to the Victorian Government on emerging employment trends and the case for creating a new commercial zone to foster growth of creative industries and mixed use precincts. A copy of the report ‘Melbourne’s Enterprise Areas’ (Echelon, 2018) can be downloaded at

Lead image credit: Live/work development in Berlin.

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